You Gotta Know When to Hold 'em

Storing the 97 corn and soybean
crops didnt pay. In October of 1997, Central Missouri cash bids averaged near $2.60
for corn and $6.60 for soybeans. These were good prices, but many expected them to go
higher. As it turned out, these prices were near the highs for corn. Soybean prices did go
higher with Central Missouri prices averaging above $6.80 during the November-December
period. Unfortunately, a lot of the grain wasnt sold at these prices and prices for
both crops have been in a down trend since then.

Down trending prices makes storage a losing proposition.
Prices need to increase more than enough to recover interest and storage charges if
storing is to be profitable. These costs can vary, depending upon interest rates and
whether the grain is stored in on-farm bins or in commercial storage. For this discussion
we will use an interest rate of 9%, commercial storage charges of three cents per bushel
per month and storage periods limited to no more than nine months were used.

Will storage of the 98 soybean crop pay?
No one can say for sure, but a look at harvest time prices may offer some clues. During
the last 24 years (1973 to 1997 crop production years), storing soybeans would have been
profitable in more than 70% of the years when October cash prices in Missouri were below
$6.00. Those years had periods of time from late winter into early summer when prices were
high enough to offer storage returns. The $6.00 price appears to be the dividing line.
Storage returns were only offered in 40% of the years when Missouris October prices
were above $6.00. The odds slip to only one year in three when October prices are above
$6.50, as they were last fall!

The chances of getting a storage return improved to 90% in
years when soybean harvest prices were below $5.50. Many expect soybean prices, this year,
in the low $5 range and many new crop bids have already dropped below $5.50. This helps
set the stage for potential storage returns for 1998 soybean production.

A similar situation exists for
1998 corn production. The deciding point, for corn, appears to be at prices near
$2.30. In the last twenty-four years, storage returns were possible in more than 90% of
the years in which October prices were below $2.30. New crop 98 corn bids are
already below this level. Storage returns were only offered in 36% of the years with a
harvest price above $2.30. This slips to nearly 13% at prices above $2.40 and last
falls corn prices were higher than this!

There are exceptions. Just like playing the
odds with cards, it doesnt always work. It paid to store 1995's $6.20 plus beans and
$2.90 plus corn. Recent low price exceptions were the 1992 corn crop and the 1991 soybean
crop, both were at low prices in the fall and never recovered enough to provide much of a
return to storage. A lower interest rate or storage charge would have changed the outcomes
some  but not much. However, most low harvest price years illustrate what market
analysts often say, "Low prices cure low prices." Low harvest time prices tend
to stimulate demand, causing prices to increase and make storage profitable. Thats
when you want to"hold em!"

Take a Load Off - Lots of Nothing is Good for
the Soil

Soil
 A Solid, a Liquid, or a Gas?An ideal soil is only 50% solids. The other half consists of pore spaces,
which, like drainage tile, allow air and water to move freely in the soil. Pore spaces are
an important ingredient to a productive soil because they also act as a reservoir for
water, which is available to the plant during periods of dry weather. Pore spaces also
give roots somewhere to move the soil as they grow.

A Recipe
for CompactionThere are many recipes for compaction, but
theyre all variations on the same theme and they read something like this.
"Pulverize the soil into fine particles  preferably with a disk. Combine water
and pulverized soil particles and press firmly with another tillage operation or with
heavy tractors, combines, trucks, or grain carts.

Heavy axle loads will produce long-lasting effects in the lower soil
profile. Discing repeatedly at approximately the same depth will cause a shallow
compaction layer.

The Good, The Bad, and The SoilCompacted soils are excellent for providing
traction but poor for supporting root growth. Roots that reach a compacted layer in the
soil often turn suddenly and grow horizontally as if they have hit a layer of concrete.

Tillage compaction from repeated discing may be only a few inches
from the surface so plants are essentially restricted to only a few inches of topsoil. At
the peak of the growing season the moisture in those few inches of topsoil just
doesnt last long. In dry weather the effects of compaction really stand out.

Harvest LiteAs harvest approaches, keep in mind that heavy combines cause
compaction. A wet fall can be worse than a wet spring in terms of causing localized areas
of deep compaction. Grain carts are among the heaviest equipment that ever enter the
field. Trucks arent equipped with tires adequate to support a load without damaging the
other 50% of the soil and grain carts can weigh up to 40 tons; the large tires on
grain carts only partially compensate for the enormous weight of grain. Confine compaction
to a permanent traffic lane. Unload the combine frequently and set up all equipment on the
same wheel spacing to minimize the compacted area.

If
You TillUse shank-type tools, such as chisel plows and cultivators and
till when the soil is dry. Repeated discing at the same depth may break the soil down into
fine particles that make a good seed-bed, but pulverized soil is also easier to compact,
especially when the soil is wet.

The
Water-Compaction CycleMoisture in the soil acts like a lubricant, allowing soil
particles to move freely against each other. Even light pressure on wet soils can cause
compaction. Low-lying areas are always more susceptible because they stay wetter. When
worked at the same time as the rest of the field, low-lying areas are more easily
compacted, and that compaction reduces water infiltration. Reduced water infiltration
causes these areas to remain wetter than ever . . . and the cycle continues.

How
Good are Your Pore Spaces?At the beginning of this article you probably
accepted the premise that an ideal soil consists of 50% pore spaces. How good are
your pore spaces? Will you have pore spaces or poor spaces in which to grow your next
crop?

MU Guides for more
information:

Many of the factors for successfully converting CRP
land to crop production start the year before the crop is planted. If your planning to
convert CRP land next spring, pH adjustments, weed control, and vole management need to
start this fall. A new publication, Converting CRP
Fields to Grain Crop Production, outlines various considerations in
converting CRP land to grain crop production, including:

Soil quality and fertility

Crop selection and cultural practices

Strategies for killing perennial grass sod and managing weeds

Prairie voles

A good rule of thumb is to go downhill in the same gear, or a lower
gear, as you would use to go uphill.

Grain Wagon Safety

The main safety considerations of
grain and silage transportation are maintaining stability and control of the truck or
tractor and wagon and avoiding other traffic.

Choose a truck or tractor that is large enough to control the
load. The towing vehicle must have sufficient weight and traction to be able to slow the
wagon and control it through turns. Reduce your travel speed and use extra caution if the
wagon weighs more than the vehicle towing it. Don't pull wagons that are more than 1.5
times as heavy as the towing vehicle, unless the wagon has its own brakes.

Standards from the American Society of Agricultural
Engineers give the following guidelines on sizing power units:

For towed equipment WITHOUT brakes:
Do not tow equipment that does not have brakes
- at speeds over 20 mph; or
- when fully loaded, weighs more than 1.5 times the weight of the towing unit.

For towed equipment WITH brakes:Do not tow equipment that has brakes
- at speeds over 25 mph; or
- when fully loaded, weighs more than 4.5 times the weight of the towing unit.

Slow down gradually if the wagon starts to fishtail, weave,
or bounce. Always reduce your speed for turns. Doubling your forward speed
increases your chance of an overturn by about four times.

Shift to a lower gear before going downhill. Don't take the
chance of losing control by shifting to neutral or leaving the tractor or harvester in a
high gear. A good rule of thumb is to go downhill in the same gear, or a lower gear, as
you would use to go uphill. Rolling the load can roll the vehicle pulling it.

If you are using a tractor to pull grain wagons, choose a
tractor with a roll-over protective structure (ROPS) and wear your seat belt. If a roll or
a collision does occur, you want the most protection possible. One cause of collisions and
rolls is a tire blowout. Make sure that your tractor tires don't have deep cuts or cracks
that could lead to a blowout and loss of control.

Remember to lock your tractor's individual wheel brakes
together for road travel. Applying one brake too strongly can swing the tractor sideways,
causing it to be rolled by the wagon. The tractor can also be forced into a spin with the
brakes locked together if the brakes are not adjusted correctly. The owner's manual or
your tractor dealer should be able to help you adjust the brakes to apply an equal amount
of braking force when the brakes are locked together.

Sharp turns can also result in an overturn, especially if the
wagon is loaded. When a sharp turn is made, the trailed equipment will try to continue in
a straight line, which can jackknife and roll the tractor.

Be sure to use mirrors that will allow you to see traffic
coming up from behind.

Unloading Safety

Suffocation under silage or grain was the leading
cause of grain- and silage-handling fatalities for the period 1985 through 1989. These
suffocations take place in gravity and auger wagons and trucks, as well as grain bins or
silos.

When auger or gravity wagons empty, grain flows to a point over the
outlet, then down and out of the outlet. Anyone, especially a child, can be drawn into the
grain flow and be buried. The flowing grain does not offer support like still grain. A
person will usually sink no deeper than several inches to a foot in still grain. Flowing
grain cannot develop this support. Workers can rapidly sink thigh-deep and will then be
unable to free themselves. A shorter person, such as a child, will be buried more quickly.
In addition, some grains, such as flax and millet, cannot support a person, even when
still.

People can also suffocate by being buried in a wagon or truck that
is being filled. The victims in these incidents are often children.

Suffocations in forage and grain wagons or trucks can be prevented
by keeping all people, especially children, out of these vehicles while they are being
loaded or unloaded.

Dump Trucks and Wagons

Trucks or dump wagons that are used to haul silage or grain
should only be emptied on firm, level surfaces. Helpers should stand far enough away to
avoid being crushed if the vehicle overturns or if the load dumps all at once. As with all
hydraulically raised devices, no one should work under a raised dump box unless the box
has been securely blocked.

The rural landscape is becoming increasingly dotted
with rows of plastic wrapped big round bales (balage). Baling high moisture forage can
increase operational efficiency and flexibility for the farm. For example  putting
up wheatlage helps increase the chance of a successful follow-up crop of soybeans; and
balage has enabled many farmers to harvest their forage crops between this spring s
frequent rains. However, while the packages of plastic wrapped balage all look very
uniform, research from Pennsylvania State University reveals substantial variation of dry
matter and nutritional value from bale to bale, field to field, and farm to farm.

Inspect, clean, and repair the bin,
electrical service, motors, and other equipment.

Sanitation  Thoroughly clean all grain
residues from bins, areas around the bins and any nearby feed bunks or other storage.
Remove all grain residues from combines, trucks and augers. These residues are the main
sources of insect infestations for farm stored grain.

Use a residual surface spray  After
all debris and grain residues have been removed, apply a residual insecticide to the
inside of the bin. This insecticide should also be applied around the exterior and to all
areas where residues were removed. Spray all surfaces until wet, usually one gallon will
cover 1,000 square feet. The labeled compounds are:Methoxychlor EC or WP; Radian EC; Tempo 2 or 20WP; and Actellic. Follow label
directions for bin application.

Control rodents  Make bins as rodent
and bird proof as possible. Use rodenticide regularly around the bin. DO NOT use
rodenticide in the bin.

Never add new grain to bins with old grain.

Check other stored grain on the farm and eliminate
insect infestations before storing your new grain.

For more information on managing stored grain,
please refer to the following MU Publications:

Storing grain after harvest
represents a substantial investment of time and money. Protect this investment by properly
managing your grain.

Good grain condition for long term storage will greatly
reduce or eliminate insect and spoilage problems. The temperature of the grain mass should
be within 20 degrees F of the average outside air temperature. This temperature
requirement can be met by cooling the grain to 40 degrees F in the fall and warming the
grain to 60 degrees F in the spring.

Control insects  Insect problems are
more likely to develop on cracked, damaged or out of condition grain. Grain protectants
are: Reldan spray or dust - labeled for use on small grains and grain sorghum; Actellic
spray or dust - labeled for use on corn and grain sorghum. None of these are labeled for
soybeans.

Apply protectants before or as grain is being elevated into
the bin. Level the grain surface and apply a surface treatment. Infestations of insects
detected in winter may be managed by lowering grain temperatures to below 50 degrees F.

Vapona resin strips may be used to control flying insects in
the space above grain. Use one strip for 1,000 cu. ft. of space. Replace every 2 months.

Once the bin is full, if insects are detected that can not be
controlled with a surface application, the grain must be fumigated. The fumigant would be
Aluminum phosphide available in solid form (pellets or tablets). These are available under
several brand names. Consider the services of a commercial applicator. Follow
label directions of the material selected for bin preparation, safety precautions and
equipment, exposure time and removal of fumigant.

Safety is an important part of grain
management. The most common accidents involve suffocation, falls, entanglement
and electrocution. There are also dangers to workers when applying any chemicals or
fumigants. In addition, spoiled grains contain storage molds and spores that can cause
illness in livestock and humans when ingested or inhaled. Protect yourself from inhaling
grain dust.

What's Your Social Security Strategy?

Farmers who report income on a
cash-basis have a tremendous amount of planning flexibility with regard to managing their
Social Security costs and benefits. Ironically, given the significance of self-employment
tax to the overall tax bill, few farmers take advantage of a pro-active strategy
for optimizing their self-employment/Social Security cost and return.

Different strategies should be utilized during different
phases of ones career. Early on, just meeting and maintaining eligibility
requirements for Social Security retirement, disability, and survivor benefits are of
extreme importance. This gets your base established. In the later phase of a career, you
may want to focus on maximizing the returns on self-employment and other retirement
dollars, while maintaining your eligibility for Social Security benefits.

For farmers in this latter category, lumping income and/or
expenses so that your earned income is relatively high every other year may yield
substantially greater retirement benefits than utilizing the more typical scenario of
trying to level-out taxable income. This lumping strategy may be advantageous
given: 1) only the highest 35 years of indexed earnings are utilized to calculate Social
Security retirement benefits; 2) there is a maximum annual earnings subject to
self-employment tax; and 3) the Social Security retirement calculation has a regressive
benefit rate schedule based on earnings.

Example  Farmer A and Farmer B, both
age 65, retired in 1997 and started drawing Social Security benefits. Farmer A had
reported the maximum self-employment earnings 1955 to 1996. Except for 1993 and 1995,
Farmer B reported the maximum self-employment earnings 1955 to 1996. For 1993 and 1995
Farmer B shifted income and expense to artificially report zero earnings for those years,
shifting the net income to 1994 and 1996.

As a result, Farmer Bs estimated monthly Social
Security benefit was reduced to $1,260; Farmer As benefit was calculated at $1,284.
Farmer B was able to avoid paying self-employment taxes in 1993 and 1995  saving
approximately $15,632 of tax liability. The tax savings could be (should be) invested in
other retirement accounts. As long as Farmer B can earn more than approximately $168 per
year on the $15,632, Farmer B should be pleased with the strategy of creating zero earned
income years for 1993 and 1995.

Given the amount of dollars involved and the
long-term consequences  investigate and analyze whatever strategy youre
considering with your financial and tax consultants. This is one of those
situations where doing nothing is doing something  be proactive!

Deere in the Headlights

As the seasons change to fall, motorists can expect to see more Deere on
rural roadways. Not the brown fuzzy deer the Department of Conservation warns motorist
about, but the much larger John Deere farm equipment (as well as other brands) used during
fall crop harvest.

Slow moving vehicles (SMV) produce some unexpected driving
conditions for motorists. The majority of the motoring public is unlikely to be aware of
the unique nature of farm machinery being driven on the roadways. Motorists are more
accustomed to sharing the roads with similar types of vehicles all traveling approximately
the same speed. They usually dont realize just how much slower a tractor is moving
compared to their own speed. A car traveling 55 mph, 400 feet behind a tractor traveling
15 mph will overrun the tractor in just 7 seconds!

It would be easy to claim that motorist should just be aware
of farm machinery and drive accordingly. But this road is a two-way street. Visibility is
one of the tools farmers can use to avoid accidents with unsuspecting motorists while
traveling on public roads.

Hazard lights and turn signals are two ways to make you more
visible to motorist on public roads, but perhaps the most traditional method of increasing
your tractors visibility is the use of reflective materials. The most recognized
warning signal is the SMV reflective triangle that should be placed on the back of all
tractors and combines. In addition to the SMV triangle, the use of two-inch wide red,
orange, yellow or white reflective strips should be used to provide an outline of not only
tractors and combines but also any implement or wagon being towed by the tractor.

These materials should not only be placed on slow moving
equipment, but also should be clean of dust and dirt before traveling on public roads.
Reflective materials can not do their job if covered with even a thin layer of dust.
Cleaning can be done easily, by wiping the materials with your hand or even a dirty rag.

A common mistake used to increase visibility is the use of
spotlights mounted on the back of the tractor cab and positioned to shine down on whatever
equipment is being towed. While this makes the towed equipment more visible from the cab
of the tractor, it blacks out the equipment to drivers coming from behind.

Recently, new highly reflective materials have been
developed and are currently available at most agriculture supply centers. These newer
materials reflect light better making them brighter and allowing equipment to be more
visible from farther away. The new reflective materials are also available in kits, for
about $30, that also provides instruction for their proper placement.

If existing reflective materials on your equipment is
beginning to fade in its ability to reflect light, replace these materials the next time
you visit your tractor and implement dealer.

When using public roads, drive as far to the right
hand side of the road as safely possible. On a regular interval, check to see if
traffic is backing up behind you and allow them to pass when possible. If making a left
hand turn, turn off hazard flashing lights (if tractor is so equipped), use turn signal
lights or hand signals, and check behind you that oncoming traffic is not attempting to
pass you and proceed with left turn.

Consider having an escort vehicle to help alert motorists. On
narrow roads and bridges, the escort vehicle should be ahead of you to warn oncoming
motorists. On wider, fast roads, the escort should follow you to warn overtaking traffic.
This is especially important if left-hand turns have to be made. Collisions can occur when
machinery starting a left turn is hit by a car passing from behind.

Before hitting the fields, be aware that other motorists are
not expecting to see or drive up on the back of a combine or implement towing tractor as
they cruise around the next corner or top the next hill. Fall is for picking
crops, not picking cars out from under the rear of farming equipment.